Science funding explained. Click the image to see the graphic. Illustration: Jenny Ridley for the Guardian

Britain is facing a major brain drain as scientists abandon the country for better-funded jobs abroad. Leading researchers, including an Oxford professor of physics and a stem cell researcher seeking a cure for the commonest form of blindness, say they are poised to quit Britain. Meanwhile the heads of several prestigious universities warn that proposed government cuts to Britain's science budget threaten "an insidious grinding down of the UK research community".

So, where does the money come from now? Basic university funding for research in the UK comes in two streams from government. In 2008/09, £3.3bn came via the research councils and £2.2bn came via the higher education funding councils.

The former is distributed through competitive grants for specific research projects and pays for equipment and PhD and postdoctoral students. The latter is distributed to universities via a formula that takes into account their scores in the Research Assessment Exercise (RAE), a rating of university departments on the quality of their output. This funding stream, called qualitative research (QR), is used to pay for basic infrastructure and staff at universities.

An additional £2.2bn comes from the R&D budgets of government departments, including medical research funds from the NHS.

Despite a decade of increases in science research funding, thanks to a booming economy and a progressive Labour administration sympathetic to research and innovation, the UK still spends a smaller amount of its GDP on R&D than other advanced countries. In 2007, the UK's public spend on R&D was 1.8%, while German's was 2.54%, France got to 2.08%, Japan was at 3.44% and the US at 2.68%.